Confirmation Techniques for the Butterfly pattern: Divergence

Divergence allows to identify trend reversal places, so to sell near the top of a trend or buy near the bottom. Very useful method to confirm validity/proper location of a butterfly pattern.

We can talk about Stochastic, MACD, RSI, Volume Divergences. The concpt is the same, so to start with let's discuss divergence based on the RSI indicator.

If price is making lower lows, but the RSI is making higher lows we are talking about regular bullish divergence.
If price is making higher highs, but the RSI is making lower highs, we have regular bearish divergence.